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WASHINGTON — In a major ruling, the IRS announced yesterday that married same-sex couples will receive the same tax treatment as heterosexual couples — potentially saving them millions when they file their returns, plan for retirement and manage life-and-death issues.
The rules announced by the Treasury Department follow a landmark Supreme Court decision declaring the 1996 Defense of Marriage Act unconstitutional.
The ruling “provides certainty and clear, coherent tax-filing guidance for all legally married same-sex couples nationwide,” Treasury Secretary Jack Lew said in a statement. “It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve.”
Gay and lesbian couples who get hitched anywhere gay marriage is legal can now carry their federal tax status with them wherever they go — even to states that don’t recognize same-sex marriage.
They would face the same financial choices as married couples, such as whether to file jointly or as “married filing separately” in hopes of minimizing their tax liability.
The new policy would apply to all federal tax provisions where marriage is a factor, including claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned-income tax credit or child tax credit. The new rules allow gay married couples to file amended returns going back as far as three years to get retroactive refunds.
Gay couples also locked in other big gains, like the ability to pass on an estate tax-free to a partner.
The IRS did not change the status of those in civil unions or domestic partnerships, who would still be considered unmarried for tax purposes.
Evan Wolfson of the Freedom to Marry advocacy group called the ruling a “day of celebration.”
Yet some gay couples could actually end up paying more.
“If you’re dealing with two professions living in a city like New York that attracts a lot of professionals and a lot of talent from all over the world, you could be hitting that top bracket pretty quickly,” said Thomas Sciacca, a New York estate lawyer who advises many gay clients.
Some might be able to game the system by staying legally single in their high-earning years but getting married and filing jointly when they get older.
“If you’re someone who likes to roll the dice and be aggressive tax-wise and you’ve got the stomach for that type of risk, that’s the best of both tax worlds,” Sciacca said.